By Dow Jones Business News, March 08, 2013, 09:05:00 AM EDT
Hiring picked up briskly in February and the unemployment rate fell to a four-year low as the recovery gained momentum
despite a host of hurdles at home and abroad.
The nation's employers added 236,000 jobs last month, notching gains in almost every sector. February's broad-based
tally surged past the 195,000 average pace of the previous three months, suggesting that amid a stop-and-start recovery,
the labor market is off to a strong start in 2013.
"The overall 236,000 number is nice, but the breadth of jobs growth across industries tells me that the recovery is
broadening and likely gaining momentum," said Mark Vitner, senior economist at Wells Fargo Securities LLC. "The mix of
jobs is also changing--we're creating higher-paying ones."
Surging stock prices, mending housing and labor markets and a booming energy sector are among the tailwinds propelling
the U.S. economy. On Friday morning, stock markets were up following the report, with the Dow Jones Industrial Average
extending its record high levels.
Recent benchmarks, including measures of gross domestic product, durable-goods orders and others, reflect a recovery
that is moving forward but at risk of losing pace as its main engine--consumer spending--is strained by higher taxes and
gas prices as well as budget wrangling in Washington. Global risks, including recession in Europe and weakness in other
U.S. export markets, also pose threats.
The details of February's report reflect a jobs market that by almost all benchmarks is headed in the right direction.
The unemployment rate fell from January's 7.9% to 7.7%, its lowest level since December 2008. That decline was due not
only to job creation but also 130,000 individuals leaving the work force.
Average weekly hours and average hourly earnings both ticked up and the employment-to-population ratio, which measures
the share of workers to the entire population, held steady at 58.6%.
The labor-force participation rate, which looks at the share of the population that is working or seeking work, edged
down to 63.5% from 63.6%. Mr. Vitner said that is likely to increase as job openings inspire more people to seek
"The disconnect here is probably very temporary," he said. "When we get to the spring, we expect the labor-force
participation rate to pick back up, particularly with all the jobs that we're creating in construction."
Among the sectors that powered February's gains were construction, with 48,000 jobs, and health care, with 32,000.
Retailers also added 24,000 positions, a vote of confidence that consumers will weather both the payroll-tax increase
and higher gas prices, and continue spending into the spring.
Government continued to lose jobs, shrinking by 10,000 in February on the eve of the sweeping budget cuts known as the
sequester, which was triggered late last week.
The Bipartisan Policy Center, a Washington think tank, estimates the sequester could shave 0.5% from GDP growth in
2013 and cost the economy more than one million jobs over this year and next. Additional threats stemming from
Washington include a possible government shutdown at the end of the month and a debt-ceiling deadline in May.
The full effects of the budget fights likely have yet to show up in the jobs numbers and could take a serious toll,
said Ian Shepherdson, chief economist of Pantheon Macroeconomic Advisors. "I don't think the economy is going to roll
over but I don't think there's much room for it to take a big hit and ignore it...If you're going to do a crazy fiscal
tightening...it's better to do it on an economy with some strength than one that is very weak."
The transportation sector also shed jobs, a drop that many economists attributed to weather. Seasonal factors may have
damped the entire jobs tally for February, setting the stage for a bump up in March. The two surveys--of businesses and
households--that yield the number of jobs gained or lost and the unemployment rate, are conducted around the 12th of the
month. This year, the surveys came on the heels of a blizzard in the Northeast, likely affecting the number of
individuals recorded as working or seeking work.
The ranks of temporary workers, often seen as a bellwether of hiring trends, surged by 16,000, after declining by
3,000 in January. Demand is up at staffing firm ManpowerGroup, although the "conversion rate" of temporary workers to
full-time ones is flat this year from last, said Chief Executive Jeffrey A. Joerres. That reflects companies' increased
productivity, Mr. Joerres said, with firms getting "very good at making trade-offs" and ensuring they have enough
workers--but not too many--to handle the essentials.
Companies hiring temp workers are taking the economic headwinds in stride, Mr. Joerres said. Despite a flurry of
domestic and international risks, businesses "are getting a bit numb to the shocks that are happening to the system," he
said. "But they're remaining on high alert."
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